Deflating gas price threatens to explode boom

I hope the International Monetary Fund is reading this because it can forget about the dollar becoming a global reserve currency, thank you.

By some accounts it was on the brink, fiscal cliff-like, of giving us that gong, except it turns out it meant moving Australia from "other" to its own category in the financial statistics it publishes.

And even then it's only thinking about it.

This wouldn't be the economic equivalent of Australia getting a seat on the UN Security Council, though both come with a cost, in this case the currency becoming a toy for bored investment bankers and other not-so-unfortunates.

This is not a club you want to join.

As the US debt and deficit problems show, countries let it go to their heads and lose economic discipline, except Switzerland, but then, it has Germany breathing down its neck.

The dollar would be pushed higher still just so it could sit in a central bank vault somewhere.

It's already one of the most heavily traded currencies, with turnover way out of proportion to Australia's foreign trade.

Besides, our dollar is too vulnerable to be a reserve currency because of the levels of national debt.

Yes, our sovereign debt is low by global standards, but it's a different picture when you add household and business borrowings as well.

Mind you, it's also well below Spain's 481 per cent, but even so. Economic goody two-shoes we ain't.

Australia tends to fly under the radar because a good part of the debt has gone on mining investment, considered more credit-worthy than investing in schools, hospitals and tanks.

Yet we may have managed to blow the mining boom. Two-thirds of the investment has been in energy projects, namely gas.

Trouble is, gas prices are lower than when they were commissioned. And their costs are a lot higher, in part because of the strong dollar - they're all foreign-owned, and so count in depreciated US dollars.

The talk is that the gigantic, aptly named Gorgon project is running about 50 per cent over budget.

Worse, there's a gas glut in the US supplied from shale, which will make it more than self-sufficient in just a few years.

If the dollar stays strong, the US will probably be able to export LNG to Asia cheaper than we can. At the same time the gas glut is tipping coal no longer needed in the US onto the market. Our LNG contracts are indexed to the oil price, so fingers crossed it holds up.

After all, higher petrol prices would be a small price to pay for keeping the boom alive.